Tuesday, October 16, 2007

World Bank Neglects African Farming

The World Bank, financed by rich nations to reduce poverty in poor ones, has long neglected agriculture in impoverished sub-Saharan Africa, where most people depend on the farm economy for their livelihoods, according to a new internal evaluation.

The evaluation was posted late last week on the bank's Web site at a delicate moment.

The bank president, Robert B. Zoellick, after 100 days in office, declared in a recent speech that a Green Revolution for Africa was among his top priorities. On Friday, as ministers from around the world gather for the bank's annual meeting in Washington, it will release its flagship World Development Report, this year devoted to agriculture.

The evaluation of the bank's role in African agriculture was conducted by an internal unit that assesses all of its operations and answers to the bank's board and president, not its management.

In the 1980s and 1990s, when African governments faced severe fiscal crises, the bank pushed for the public sector — often badly managed and inefficient — to pull back from agriculture, incorrectly assuming that market forces would jump-start agricultural growth.

"In most reforming countries, the private sector did not step in to fill the vacuum when the public sector withdrew," the evaluation found.

One result, it said, is that farmers face practical obstacles: exorbitant fertilizer prices and shortages of credit and improved seeds. In recent years, yields for cereal crops in sub-Saharan Africa were less than half of South Asia's and one-third of Latin America's, the evaluation said.

At a time of growing debate about how to combat hunger in Africa, the evaluation team recommended that the bank, the single largest donor for African agriculture, concentrate on helping farmers get the basics they need to grow and market more food: fertilizer, seeds, water, credit, roads.

Professor Sachs called the evaluation "a blistering, devastating critique." Professor Easterly, a research economist at the bank for more than a decade, likened the evaluation to saying Coca-Cola is bad at making its signature soft drink. "Here's your most important client, Africa, with its most important sector, agriculture, relevant to the most important goal — people feeding their families — and the bank has been caught with two decades of neglect," he said.

The bank's management, in its written reply to the evaluation, differed with some of the analysis and had a more optimistic reading of the agricultural growth data, but said it was already carrying out the evaluation's main recommendation — that the bank should invest more in agriculture in sub-Saharan Africa.

The evaluation noted that the bank's lending for African agriculture, which fell to a low of $123 million in 2000 from $419 million in 1991, had increased to $295 million in 2005 and $685 million in 2006.

Bank managers, in a written reply and an interview on Sunday, said the evaluation team had not given enough recognition to the new directions the bank had taken since African leaders committed in 2003 to increase spending on agriculture.

"We agreed with the general thrust of the evaluation," Obiageli Ezekwesili, vice president for the Africa region at the bank, said in an interview. "What we, of course, want to state is that every evaluation is backward looking."

Looking ahead, she said, the bank is now working with African countries "that have increasingly begun to realize that agriculture has to have pride of place in public expenditures."

More must be done to overcome a dearth of seeds and fertilizers, she said.

While acknowledging the recently increased aid levels, Vinod Thomas, who leads the bank's Independent Evaluation Group, said in the evaluation that the bank's limited financing for agriculture had not been well used. The evaluation group reviewed lending trends for a portfolio of 262 projects over the past 15 years that had agriculture components.

"The lending support from the Bank has been 'sprinkled' across various agricultural activities such as research, extension, credit, seeds and policy reforms in rural space, but with little recognition of the potential synergy among them to effectively contribute to agricultural development," he wrote.

The evaluation also found that the bank, which has a staff of about 10,000, had only 17 technical experts assigned to the department that deals with agriculture and rural development in sub-Saharan Africa last year.

Bank policies in the 1980s and 1990s that pushed African governments to cut or eliminate fertilizer subsidies, decontrol prices and privatize may have improved fiscal discipline but did not accomplish much for food production, the evaluation said.

It had been expected that higher prices for crops would give farmers an incentive to grow more, while competition among private traders reduced the costs of seeds and fertilizer. But those market forces often failed to work as hoped.

"The whole thing was based on the idea that if you take away the government for the poorest of the poor that somehow these markets will solve the problems," Professor Sachs said. "But markets can't step in and won't step in when people have nothing. And if you take away help, you leave them to die."

Professor Easterly said the bank's managers had made elementary mistakes. "It was a simplistic, Economics 101 lesson, that if you raise prices, farmers produce more, which makes sense if farmers have roads, access to credit, good access to fertilizer markets," he said. "But most of the time, farmers were lacking those."

Some agricultural analysts hope the current reconsideration of African agriculture offers a new opportunity.

Carl K. Eicher, a professor emeritus at Michigan State University and an authority on African agriculture, said rich country donors and African governments also shared some responsibility for the continent's farming problems.

"The bank is turning the ship around and it has been for the last couple of years," said Professor Eicher, who has served as a consultant to the bank. "So let's give them a little credit."

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